{"id":14821,"date":"2025-05-09T06:06:06","date_gmt":"2025-05-09T06:06:06","guid":{"rendered":"https:\/\/finderica.com\/?p=14821"},"modified":"2025-05-09T06:06:06","modified_gmt":"2025-05-09T06:06:06","slug":"the-federal-reserve-and-economic-signs-point-to-growing-worry","status":"publish","type":"post","link":"https:\/\/finderica.com\/?p=14821","title":{"rendered":"The Federal Reserve And Economic Signs Point To Growing Worry"},"content":{"rendered":"\n
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<\/p>\n

A loan worried figure.<\/p>\n

<\/fbs-accordion>getty<\/small><\/figcaption><\/figure>\n

The sirocco, a wind that blows from the Sahara and across the Mediterranean, delivers, in turn, dry and then humid air that can reach hurricane speeds. It\u2019s said to cause people to become irritable, aggravate health problems, and abrade mechanical devices.<\/p>\n

There\u2019s an economic sirocco coming in from previous conditions, skimming over trade war uncertainty, pulling up additional heat from volatile labor markets, lifting vapors of concern about the national debt, getting a boost from growing international distrust over U.S. actions and intentions, and blossoming into a hot and damp atmosphere. The chances of a recession continue to grow.<\/p>\n

What The Fed Said<\/h2>\n

There was no surprise in the Federal Reserve\u2019s Federal Open Market Committee decision to keep the short-term benchmark federal funds rate in the 4.25% to 4.50% range. What Fed watchers kept their eyes and ears on wasn\u2019t the number, but rather the FOMC statement and Chair Jerome Powell\u2019s remarks after the two-day meeting closed on Wednesday.<\/p>\n

The FOMC statement was mixed. It mentioned that what made the country\u2019s gross domestic product shrink in the first quarter of 2025 was a surge of imports as companies brought in goods before tariffs hit their new high values. Otherwise, the economy was \u201cstill in a solid position,\u201d as unemployment also remained low.<\/p>\n

However, Powell\u2019s remarks<\/a> explicitly addressed some negative signs. Consumer confidence has fallen in multiple surveys. Inflation measured 2.3% over the 12 months ending in March. Excluding the volatile food and energy categories, it was 2.6% year-over-year. As the target inflation is 2%, the economic position has remained more tenuous than the Fed has wanted.<\/p>\n

Powell also said that if large tariff increases remain, \u201cthey are likely to generate a rise in inflation, a slowdown in economic growth, and an increase in unemployment.\u201d It could be that an inflation result could be a one-time boost, or it could be more persistent. \u201cAvoiding that outcome will depend on the size of the tariff effects, on how long it takes for them to pass through fully into prices, and, ultimately, on keeping longer-term inflation expectations well anchored,\u201d he added.<\/p>\n

The Fed\u2019s responsibility is to tend its dual mandate of stable prices and maximum sustainable employment. That may result in a \u201cchallenging scenario\u201d of the two being \u201cin tension,\u201d as Powell said. At that point, they might have to juggle between the two, suggesting that either prices would rise faster than intended or unemployment would begin increasing. The situation may not occur, but it is something Powell and the Fed are now mentioning as a potential challenge.<\/p>\n

Uncertain Economic Signs<\/h2>\n

Oxford Economics, in an emailed statement on Wednesday, thought the Fed would most likely wait to react to data as it becomes available and to situations as they develop, which might mean no interest rate cuts until December. This would follow how the central bank has reacted in the past.<\/p>\n

However, the organization waited a good year while interest rates were climbing before taking action, and those measures did not seem to deter inflation growth. The rise in prices was split between pandemic-induced supply chain disruptions and large corporations using the conditions to increase pricing and, as a result, sharply increase profits since the pandemic. Sometimes, no action is better than some, but then, ill-timed action is frequently unfortunate.<\/p>\n

As Oxford Economics wrote, ongoing strength of the labor market has been good news. How long will it last? The impact of federal job cuts has yet to be felt in jobs reports; April\u2019s numbers showed only a 9,000-position drop. When the report came out in early May, ManpowerGroup called it a \u201cwelcome surprise,\u201d but one with \u201ccracks in the foundation\u201d that showed strain. The company\u2019s data suggested an 11% year-over-year reduction in job openings as companies \u201ctake a more strategic and deliberate approach\u201d to hiring, incorporating a \u201cwait and watch\u201d approach.<\/p>\n

A new report from the Bureau of Labor Statistics shows a 0.8% decrease of productivity in Q1 2025 while unit labor costs were up 5.7%, both on an annualized basis. The drop is just one month\u2019s number, but if the fall continues, it could preface an economic slowdown.<\/p>\n

Year-over-year gas prices are dropping, which may sound good until you remember that it means energy markets think global economies will slow. That could mean a recession. The Trump administration wants sharp cuts in housing assistance for lower- and low-income households. Congress might go along or not; presidential preferences never pass through into budgets without modification or disagreements. But even the presidential budget \u201cwould remain essentially unchanged at $1.6 trillion<\/a>,\u201d wrote Veronique de Rugy in the libertarian Reason.<\/p>\n

There are too many unknowns, too much complexity in the economy, too little international faith in the U.S. economy and global position. Too much could go wrong, and that alone is maybe the largest worrying sign.<\/p>\n<\/div>\n

Source link <\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

A loan worried figure. getty The sirocco, a wind that blows from the Sahara and across the Mediterranean, delivers, in turn, dry and then humid air that can reach hurricane speeds. It\u2019s said to cause people to become irritable, aggravate health problems, and abrade mechanical devices. There\u2019s an economic sirocco coming in from previous conditions,<\/p>\n","protected":false},"author":1,"featured_media":14822,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"rank_math_lock_modified_date":false,"footnotes":""},"categories":[196],"tags":[729,478,2720,2321,1546,2347,1539],"class_list":{"0":"post-14821","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-finance-news","8":"tag-economic","9":"tag-federal","10":"tag-growing","11":"tag-point","12":"tag-reserve","13":"tag-signs","14":"tag-worry"},"_links":{"self":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/14821","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=14821"}],"version-history":[{"count":0,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/posts\/14821\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=\/wp\/v2\/media\/14822"}],"wp:attachment":[{"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=14821"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=14821"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/finderica.com\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=14821"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}